Rating Change #8
Cubist Pharmaceuticals Inc (CBST) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share.
Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 0.8%. Since the same quarter one year prior, revenues rose by 31.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The gross profit margin for CUBIST PHARMACEUTICALS INC is currently very high, coming in at 77.00%. Regardless of CBST's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CBST's net profit margin of 3.20% is significantly lower than the same period one year prior.
- Compared to its closing price of one year ago, CBST's share price has jumped by 90.11%, exceeding the performance of the broader market during that same time frame. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Biotechnology industry. The net income has significantly decreased by 53.1% when compared to the same quarter one year ago, falling from $14.55 million to $6.82 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Biotechnology industry and the overall market on the basis of return on equity, CUBIST PHARMACEUTICALS INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
Cubist Pharmaceuticals, Inc., a biopharmaceutical company, focuses on the research, development, and commercialization of pharmaceutical products that address unmet medical needs in the acute care environment. The company has a P/E ratio of 61.2, below the average drugs industry P/E ratio of 69.5 and above the S&P 500 P/E ratio of 17.7. Cubist has a market cap of $2.53 billion and is part of the health care sector and drugs industry. Shares are up 3.5% year to date as of the close of trading on Friday.You can view the full Cubist Ratings Report or get investment ideas from our investment research center.